"While historically we've reserved our "SELL" rating to business models with structural challenges, we find TWTR's valuation to be excessive and currently see materially more downside than upside," analyst Youssef Squali said.

TWTR trades at 30.8x EV/Revenue and 261.5x EV/ EBITDA the firm's FY:14 estimates which is the Street-high.

Even adjusted for growth shares are expensive the analyst said. ". Putting TWTR's valuation relative to its IPO in context, even compared to other high-flying Internet IPOs, Twitter is in a class of its own. TWTR's 30.8x EV/Revenue multiple ~2 months post-IPO compares to ~15x for Google, ~16.5x for LinkedIn, ~8.5x for Facebook and ~4x for Yelp, around the same period. Even adjusted for growth, TWTR's EV/Revenue/ Growth is ~0.30x two months post-IPO vs. 0.19x for FB, 0.14x for GOOG, 0.13x for LNKD, and 0.06x for YELP."

Squali also notes a major discrepancy in estimates between "banking" analysts and "non- banking" one. "A quick look at the make-up of consensus estimates reveals that analysts whose banks were involved with the TWTR IPO generally have estimates that are lower than those not involved," the analyst explains. "For example, FactSet's overall consensus 2014 revenue is $1,118M (vs. ~$1,041 for banking analysts) and consensus 2014 EBITDA is $138M (vs. ~$98M for banking analysts). For the stock to work materially from current levels, it would require beating not only consensus estimates, but the more aggressive ones from non-banking analysts as well, in our view."

The analyst also notes the first IPO lock-up expiration is just a little over a month away. Starting 2/15, up to 9.9M Twitter shares held by non-executive employees will be eligible for sale to satisfy income tax obligations. Additionally, a much larger expiration occurs on ~May 7th, with 454.3M shares becoming eligible for sale (subject to Rule 144). "Considering the run-up in TWTR since IPO, lock-up expiration (especially the May one) is likely to pressure the stock short-term," the analyst said.

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